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The Year of the Hack

When the White House abruptly announced that President Obama would spend two days with the new Chinese President, Xi Jinping, in the California desert next month, it was a surprise. Why now? Would the Chinese—who have fought bitterly before previous summits to insure as much pomp as possible—forgo a state visit for a tête-à-tête among the cacti?

We now have ample evidence that the first major summit in the heyday of cyber espionage can hardly come soon enough. On Monday, as U.S. National Security Adviser Tom Donilon was in Beijing meeting with Chinese officials, the Washington Post disclosed that Chinese hackers have gained access to designs for “many of the nation’s most sensitive advanced weapons systems.” While it might have made for some awkward dinner chat, it lent a new depth of meaning to Xi Jinping’s otherwise bland comment to Donilon that relations with the U.S. are at a “critical juncture.”

The programs that were breached, according to a confidential report to the Pentagon, affect more than two dozen of the most critical technologies, including missile defense, combat aircraft, and ships. The news goes a long way toward explaining why the Obama Administration has become noticeably more assertive in recent months about calling out China for hacking: in a report to Congress last month, the Pentagon specifically blamed the Chinese government, for the first time, for breaching sensitive U.S. systems, and the National Intelligence Estimate “concluded that China was by far the most active country in stealing intellectual property from U.S. companies.”

One question that must asked in the weeks ahead is: What happens to the contractors who did not adequately defend their secrets? Foreign governments are not going to give up spying any time soon (nor will ours), so it will be up to the U.S. to make sure its well-compensated contractors are putting American tax dollars into policing their own perimeters. “In many cases, they don’t know they’ve been hacked until the FBI comes knocking on their door,” a senior military official told the Post. “This is billions of dollars of combat advantage for China. They’ve just saved themselves 25 years of research and development. It’s nuts.”

But this is about more than breaking into defense contractors’ systems: after months of reports of sustained, systematic infiltration of U.S. companies, including the New York Times, the latest hacking news has ushered in a new, more sensitive period in the U.S.-China relationship, putting greater urgency on reducing military and cyber tensions. For the past decade, Presidential summits have hinged mostly on matters of trade and economics.

These days, nobody is burning much energy talking about currency. (That’s partly because the Chinese yuan has climbed in value, though not as much as the U.S. would like) The talk now is about “strategic distrust,” the recognition, by both sides, that each fundamentally doubts the other’s long-term intentions. This has become more acute in the past two years, as China has pursued territorial disputes with American allies including Japan, India, Vietnam, and the Philippines, and as the United States has signalled its intention to rebalance, or “pivot,” toward Asia. Recently, American officials have expressed some optimism that Chinese leaders are more prepared than they have been in the past to help restrain North Korea’s nuclear ambitions, and that could be a promising foundation for other issues of mutual concern, such as Iranian nuclear development and the violence in Syria.

In recent months, China has been saying that it’s time for a “new type of major power relations”—a term that seems calibrated to signal China’s realization that its future stability hinges on getting it right with the United States, but stops short of any exclusive “G-2” relationship, which sounds, to Chinese ears, like too much responsibility.

Frankly put, neither side believes much of what the other says—and each hopes that a couple long days outside Washington and Beijing, on the two-hundred-acre Sunnylands Estate, will begin to change the conversation, even if it does not produce immediate breakthroughs. One area in which a summit can make progress is in acknowledging the scale of state-supported commercial espionage. For years, American companies stayed silent because they did not want to look vulnerable or alienate the Chinese market. They are no longer silent. Another potential area of discussion is cyber warfare—the prospect that a limited military crisis could spiral into catastrophic attacks on the infrastructure of vital national systems. Now is the time to establish lines of communication.

Patience in some quarters is running out. Jon Huntsman, the former U.S. Ambassador to China, and Dennis Blair, the former Director of National Intelligence, published a report last week advocating a hard new line on Chinese hacking; among other measures, they weighed import tariffs on Chinese goods and legal changes that would permit American companies to launch retaliatory attacks.

For both sides, this summit is a bet worth taking. Xi, with a glamorous first lady and a knack for the minor theatrics of diplomacy, has an opportunity to defuse a crisis in the making. The days when the Chinese quibbled with the United States over whether to have lunch or dinner will seem naïvely quaint if the two can’t change their shared trajectory.

Illustration by Guy Billout

Evan Osnos joined The New Yorker as a staff writer in 2008, and covers politics and foreign affairs.